WASHINGTON (Reuters) - Keith Higgins, who runs the office that reviews public companies' books at the U.S. Securities and Exchange Commission, reported stock holdings worth between about $2 million and $6 million last year and the sale of stocks throughout 2014, according to SEC disclosures viewed by Reuters.

Higgins disclosed holdings in about 90 public companies during his SEC tenure in 2013, making him the biggest investor in individual stocks among the agency's top officials last year.

Since the beginning of the year, he has reported about 60 transactions involving sales of stocks such as Dollar Tree (DLTR.O), Apple (AAPL.O), Abbott Laboratories (ABT.N) and Raytheon (RTN.N), with about two-thirds of those occurring in late September in a flurry of sales. Higgins may no longer be the biggest stock holder among the top SEC officials Reuters reviewed because of these sales.

Such stock holdings are permitted by federal and SEC ethics laws and regulations. The law already protects against conflicts by prohibiting government officials from working on matters that could benefit them financially.

But Higgins' large holdings, and the volume of trading he reported during 2013 and 2014, may stoke debate about whether it's proper for the Director of Corporation Finance or other top SEC officials to be active stock market participants and whether the SEC needs to tighten its ethics policies to further reduce the appearance of potential conflicts.

"The SEC should explain how and why its procedures allowing top officials to hold individual stock are adequate to prevent the appearance of a conflict of interest," said Iowa Republican Senator Charles Grassley, responding to questions posed by Reuters. Grassley is a frequent SEC watchdog and is due to become the next chairman of the Senate Judiciary Committee.

A Reuters review of financial disclosures provided by the agency show that while working for the SEC in 2013, Higgins reported holding stocks, American depository shares and one specialized product that gives shareholders certain rights after a merger. Collectively, these investments ranged in value from a little less than $2 million to just under $6 million.

From those holdings, Higgins reported between about $53,000 to about $185,000 in dividends and/or capital gains for calendar year 2013.

An SEC spokesperson said that the agency has a strong conflict-of-interest policy and that Higgins' holdings have not resulted in many recusals. He's complying with the conflicts rules, the spokesperson said.

"The SEC's stock ownership rules are one of the most, if not the most, stringent of any federal government agency and go well beyond the standard prohibitions," the spokesperson said. "A number of safeguards are in place in order to avoid even the appearance of a potential conflict of interest, including the requirement that all transactions be approved in advance and reported to the agency's ethics office.

"Mr. Higgins' limited number of recusals has had no impact on his ability to perform his responsibilities as the Director of the Division of Corporation Finance. He has and will continue to provide his sound judgment and expertise in making decisions on the significant matters in the division."

Higgins declined to comment for this story.

ROPES & GRAY

Higgins, 63, joined the SEC in June 2013, after spending about 30 years at the Boston-based law firm of Ropes & Gray LLP where he handled numerous initial public offerings.

Higgins reported a partnership income of about $1.1 million for his work in 2013, according to his disclosures.

At the SEC, Higgins oversees the division that reviews thousands of potentially market-moving company disclosures each year and gives companies feedback on their compliance with SEC disclosure rules.

The division also decides when companies can exclude shareholder proposals from corporate ballots, and can determine when companies that break the law can be granted certain regulatory waivers, such as one that lets larger, well-known companies conduct capital-raising deals without prior SEC approval.

Former SEC officials say Higgins' job typically involves higher-level policy decisions, and directors rarely get involved in company-specific disclosures and decisions. They also said the agency is careful about managing conflicts through recusals.

David Martin, a former SEC corporation finance director who now works for the law firm Covington & Burling LLP, said, "I would imagine that Keith could serve his entire time there and never be the deciding voice on a major issue for one of the companies in which he holds stock."

REDUCING CONFLICTS

An SEC spokesperson said that some of the stocks reported by Higgins last year are in a trust that belongs to his mother-in-law. She relies on the trust for financial support, and Higgins' wife is the contingent beneficiary.

Under federal ethics laws, the financial interest of these holdings would be imputed to him as well.

Richard Painter, a professor at the University of Minnesota Law School and former White House ethics lawyer, said family trusts are a common problem when trying to navigate conflicts, and sometimes the only way to resolve it is through recusals.

"It is very difficult to ask family members and family trusts to sell stocks when they will surely get hit with a capital gains tax for doing so," he said.

"The best answer is sometimes to live with the conflict."

The SEC declined to say how many times Higgins has needed to recuse himself due to his financial holdings.

"To reduce the time needed to monitor his holdings, Mr. Higgins reduced his individual stock holdings through a series of sales in the fall of this year," an SEC spokesperson said. "Because any stock held in his mother-in-law's trust continues to require monitoring, the sales involved stocks not also owned by the trust."

TIGHTENING THE RULES

Federal ethics rules give employees across the government a variety of options for managing conflicts. Employees, for instance, are not required to recuse on matters if they own below $15,000 in a stock. Staffers can also manage conflicts through other means, including recusals and seeking ethics waivers.

All U.S. government employees are required to recuse themselves from any particular matter that could financially benefit themselves, their spouse or a dependent child.

Many government agencies have supplemental rules tailored for them. The Federal Reserve, for instance, bans employees from investing in banks or certain government securities dealers.

The SEC adopted tighter ethics restrictions in 2010 that ban staff from holding the stock of any company directly regulated by the SEC, including many banks, which operate SEC-regulated brokerages, asset managers or stock exchanges.

The agency staff is also prohibited from buying and selling any stock of a company under investigation, and they are generally subject to a six-month holding period after purchasing a security.

In addition, staff must get all of their trades pre-cleared through an automated ethics program that checks for possible conflicts and, in some cases, by an SEC ethics attorney.

Some experts said the ethics rules on the books are already strict enough, and making them tougher could adversely affect the SEC.

Donald Langevoort, a professor at Georgetown University Law Center, said tightening ethics rules further could chill recruitment of top talent. There are benefits to having active investors in SEC leadership ranks, including the idea that it gives them "a little skin in the game," he said.

Michael Guttentag, a professor of securities law at Loyola Law School in Los Angeles, said it's "ill-advised" for public figures in a position of power in the markets to own individual securities. "At the very least, it creates the potential impression of impropriety," he said.

HIGGINS' PORTFOLIO

Some of the stocks in Higgins' disclosures, such as Google and Apple, were listed for multiple accounts, including an IRA retirement account.

Since the beginning of 2014, Higgins collectively reported about 60 stock transactions that in total ranged in value from a little over $600,000 to as high as over $2 million, according to more recent disclosures Higgins filed throughout this year.

For many of Higgins' individual stock holdings, the disclosures don't specify when the stocks were originally bought or at what price.

Some of the transactions reported suggest the stocks were not sold at especially opportune times.

For example, he reported selling Nike on May 28, 2014, when the company's shares closed at $76.27. Since then, the stock has climbed 24 percent. On the other hand, Higgins reported selling Exxon Mobil shares on July 14 when its stock closed at $102.68. Since then, the stock has dropped 6 percent.

It couldn't be determined how many stocks Higgins' family may still own, in part because federal ethics rules don't require him to disclose purchases or sales that fall below a $1,000 threshold.

PORTFOLIOS OF TOP SEC OFFICIALS

Of all the top SEC directors or commissioners, Higgins reported holding the most individual stocks in 2013. Coming in second last year was Norman Champ, the director of the Investment Management Division, the unit tasked with regulating asset managers. Champ reported holdings in about 50 individual company stocks, as well as a variety of corporate and municipal bonds and mutual funds.

Champ declined to comment.

The only other top SEC officials to report owning individual stocks were Steve Luparello, the head of Trading and Markets, Mark Flannery, the chief economist, and Democratic SEC Commissioners Luis Aguilar and Kara Stein.

Luparello reported holdings in a little more than a dozen different stocks.

Aguilar reported holdings in a little over half a dozen, though two were inherited by his wife and divested in April 2013 to comply with ethics requirements, records show.

Stein and Flannery each reported holding one stock.

"In advance of becoming an SEC commissioner, I was advised by the SEC's ethics office as to what investments I needed to sell and what investments I could legally retain and I followed their advice," Aguilar said in an interview with Reuters.

"Since then, I have neither bought nor sold any new public companies. Both I, my staff and the SEC ethics office monitors these holdings and I recuse from these matters whenever I am advised to do so."

Luparello, Stein and Flannery declined to comment.

The remaining top officials, including SEC Chair Mary Jo White, only listed equity and debt holdings in mutual funds, exchange-traded funds or other indices, as opposed to individual stocks.

Mutual funds, exchanged-traded funds and other indices made up the majority of the kinds of holdings reported by most top SEC officials.